This is not a drill: Pa. looks at fee

Grover Norquist may have unintentionally paved the way for Pennsylvania to impose a tax or fee on natural gas drilling in the Keystone State, a former state environmental chief says.

The conservative activist has played a significant role in the drilling debate in Pennsylvania, where many lawmakers and Gov. Tom Corbett have signed a no-new-taxes pledge promoted by Norquist’s group Americans for Tax Reform. But at the same time, Corbett has endorsed imposing an impact fee on gas drilling, as called for in one of two competing bills moving through the state Legislature.

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The House and Senate bills differ on which level of government would collect the fees and how the money would be distributed. Either way, Norquist has argued that no matter what you call it, a tax is still a tax is still a tax.

So what’s a Republican Legislature to do? Simple, said former state Department of Environmental Protection Secretary David Hess: Move forward unencumbered toward a compromise on the bills.

“Since [Norquist] said both bills are a tax, I consider that issue off the table,” said Hess, who led the department under former Republican Govs. Tom Ridge and Mark Schweiker. “We can focus on what’s going to be a simple, clean, effective way to collect the tax and allocate the revenue.”

The two bills, which each passed in one chamber of the Legislature, would amend the Pennsylvania Oil and Gas Act to divide revenues from natural gas royalties and fees, among other provisions. Pennsylvania is the only major gas-producing state that does not have a severance tax or impact fee for gas developers.

The impact fee proposed in the House bill mirrors Corbett’s suggestion for a $40,000 fee per well that would gradually decrease over 10 years.

The fees would be administered at the county level, and the majority of the money collected would stay in local coffers. A portion of the money collected would go toward funding environmental programs.

The Senate bill proposes a 20-year fee beginning at $50,000 per well and adjusted annually to reflect the production of the well. That plan would be administered at the state level, and 45 percent of the money collected would go to the state, with the remainder staying with the local municipality.

Last spring, Norquist labeled an earlier version of the Senate proposal a tax, and he recently came out against the House-proposed impact fee as well.

“Just look at where the money goes, and it is easy to see that it does not pass the laugh test when it comes to trying to claim this as a fee,” Norquist wrote in a letter to the state House.

Corbett argues that drillers affect communities and should have to pay compensation.

“But I don’t believe they are taxes,” Corbett told reporters this month. “So I guess we have a difference of opinion.”

On Wednesday, Americans for Tax Reform’s Director of State Affairs Patrick Gleason said the group understands that Corbett “is working with lawmakers as well as conservative and free-market organizations to improve these bills as they move through the legislative process.” He called Corbett’s work a “huge change from the days of [former Democratic Gov.] Ed Rendell.”